Economy gains traction in Q1

According to a preliminary release, annual GDP growth accelerated to 4.6% in Q1 2024 from 3.8% in Q4 2023. The outturn was markedly above market expectations.

The statistical office did not provide a comprehensive breakdown, but monthly data hints that private spending was in the driver’s seat: Retail sales rose at a faster pace in Q1 than in Q4 as inflation cooled throughout the quarter. Moreover, industrial output gathered steam, and a narrowing trade deficit suggests that the external sector was less of a drag. A detailed breakdown is scheduled to be published on 31 May.

Alen Kovac, analyst at Erste Bank, commented on the outlook: “Consumption is expected to be the main driver of GDP growth in 2024. Disinflation and double-digit wage growth are expected to boost real disposable income, while credit conditions are set to improve throughout the year. Despite earlier estimates predicting sluggish growth due to weak performance in key EU partners, industry is showing promising level of activity.”

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